Tax Law FAQs

What income is subject to tax?

All income is subject to tax. Even income derived from illegal activities is taxable.

How do governments collect taxes?

Most taxes are collected at the time a transfer is made – withholding from a paycheck, added to the purchase of goods at the point of sale, or when a license/permit is being issued. Taxes are also collected when information and tax returns are filed with the government. Individuals who fail to file information and tax returns face stiff penalties. In addition, it is a crime to fail to pay taxes or submit tax returns when due.

What if I have paid too much in taxes?

You can apply for a refund. When you file your taxes, there is a place on the return for you to tell the government that you want a refund on the excess tax that was collected. After reviewing the return, if the government agrees that you are due a refund, a check will be issued to you for the excess amount collected.

What if I am unable to pay taxes due?

If the taxes are in the form of sales, excise, or license/permit – you will probably have to do without until you can pay the taxes.

If you are unable to pay your income tax bill, you may be eligible for a payment plan with the government. Keep in mind that certain penalties will be added to your unpaid taxes until the amount is paid in full.

What is an audit?

An audit is an investigation to determine whether the information provided to the government on a tax return is correct. The burden of proof is on the taxpayer during the audit.

Many audits result in no change, meaning that the submitted information on the return was accurate. However some audits do result in an assessment, while some can result in a refund. If you are audited, you may want t consider getting the help of a tax lawyer.